Nine Ways To Improve Your Closing Ratio - Part 1

You’ve pre-qualified your prospects. They look good and you’ve made an appointment with your lender for the formal loan application. You’re feeling good about yourself now because, as far as you’re concerned, this house is sold...or is it?

Don’t spend your money before you get it!

Would you be shocked to learn that a full 25 to 40% of the buyers you put before a lender will not make it to the closing table? That’s right. Over one fourth won’t close and you’ll have to start all over. Most of the time there are things you can do to raise your odds of success.

That’s what we’ll cover here. However, sometimes there are things that crop up that cannot be controlled no matter how good you are. As I write this, I’m shedding tears on my paper, because of one of those uncontrollable events that happened to me.

I bought a house for $12,000 through a Realtor¨. I then spent $7,000 fixing it and put it on the market for $49,900. A buyer came along who agreed to buy it if I’d add a garage. I had already pre-qualified this buyer so I said OK, I’ll add a garage after the loan is approved and raise the price to $51,900. The buyer agreed so we got the loan working. About three weeks later, she was approved. So I added the garage for $3,000 and installed the carpet and A/C, which I planned to do anyway.

Well, to make a long story short, we were two days from closing and she decided she didn’t want my house anymore. She had found one she liked better. Now, this was after we spent the time and effort to get her approved and after I built her a $3,000 garage. There just wasn’t any way I could convince her to close on my house instead of the other one she liked better.

Now, I can just hear you say...but you had her deposit and a contract. That’s true. I did have a $500 deposit and a signed contract. So what! Obviously, I kept the deposit. Naturally I was upset. But none of my feelings got me any closer to that fat profit check I was going to collect in two days. So the moral of this sob story is...don’t spend it until you get it. There just might be a case here for another strong message too. When you collect a binder from a buyer...get every dime you can.

Looking back on my dilemma, I should have collected another thousand or two before I built the garage. If I had, the deal would be closed by now instead of me starting over. I knew better, I just didn’t do it. Man, this education is expensive. You’d think there would be a time in the life of a guru that he wouldn’t have to keep going to these seminars, wouldn’t you? All right, let’s get on to making your closing easier. I’ll give you a step-by-step process to get you from loan application to closing and beyond.

Step 1. Make Sure The Lender Orders Appraisal And Credit Report Immediately

You should tell your buyer to bring in the amount needed the day the loan application is taken (usually $300 - $400 to cover the credit report and appraisal). Insist to the lender that both be ordered immediately. Many loan processors tend to wait until the documents are all in before they order the appraisal. Don’t allow this to happen. If you do, it will take an additional two weeks to 30 days to get your buyer closed because of the time needed to get the appraisal done.
Another reason to order now is the appraisal can be used for your next buyer if this one doesn’t make it. Let this buyer pay for it. FHA and VA and most conventional appraisals are good for six months. Make sure your contract is written so you are not required to reimburse any expenses to a buyer who does not qualify. If they can’t qualify, you’ll have nothing to refund except the binder deposit.

Continued in Part 2

Article Source: Main Articles

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